5 Reasons for an Accounts Receivable Automation Process

A healthy cash flow is the lifeblood of any business. And having an efficient accounts receivable process is what keeps that vital element steadily pumping. Much like clogged arteries will almost certainly have a negative impact on a person’s health, when your receivables process is inefficient and unpredictable, hindered by cumbersome error-prone manual processes, your business as a whole is likely to suffer. At the very least, it won’t be as successful as it could be. 

So how do you ensure your AR processes are as streamlined as possible? One way is with automation. Automating your accounts receivable process, especially with software that leverages machine learning (ML) and artificial intelligence (AI) is a driver of efficiency and productivity. 

It’s fair to say that a majority of C-suite executives would agree. According to a 2019 report by Accenture, 84% of business leaders believe that reaching their growth objectives depends on leveraging AI. Furthermore, 75% believe that scaling AI by 2024 is necessary otherwise they risk shutting their doors entirely.

If your desired outcome is operational agility, steady cash flow and ultimately a thriving business, here are five main reasons for implementing an automated accounts receivable software solution that’s powered with AI:

• Gain efficiency in workflows

• Get paid faster to increase cash flow

• Improve cash management and cash forecasting

• Lower direct and indirect costs in AR  

• Enhance customer relationships

Before we get into the specifics of how AR automation works to bring about each of these benefits, let’s get a clear understanding of what AI is and debunk some common misperceptions about this innovative technology that sounds like something from a sci-fi movie.

What is artificial intelligence?

Artificial intelligence is the ability of machines (computers) to learn from data and analytics over time and perform tasks that normally require human thinking such as problem-solving and decision-making. 

What is artificial intelligence not?

For starters, there’s the myth that AI is only for the big guys who have the specialized IT resources and budgets that make leveraging AI within reach. That may have been true at one point in time. But no longer. Companies such as Payference have made it their mission to develop AI-enabled products for mid-market size businesses. 

Next, how about the idea that introducing ML and AI to your business means booting out personnel? That’s usually not the case. What is more likely is that by replacing manual tasks and improving efficiency, finance teams are free to work on more strategic initiatives that contribute to the growth of the business. 

Shifting the focus of these finance professionals from the mundane to tasks of higher value helps avoid burnout and increase retention rates. And because many AR automation solutions make it easy to scale, it could mean that you don’t have to add to your headcount to meet the demands when business expands.

Lastly, AI is much more than Alexa or a chatbot. Artificial intelligence is used for data analytics, Natural Language Processing (NLP), making product suggestions and predicting consumer behavior, cybersecurity, customized marketing efforts and, of course, automating manual tasks.

5 Reasons to Automate Your Accounts Receivable Process with AI

1. A streamlined AR process leads to greater efficiency

Generating invoices and processing them involves multiple steps and sign-offs. Once approved, invoices must be sent to the correct customer for more processing on their end before they can issue a payment. What seems a straightforward process that should only take hours can take days and weeks. 

Automation reduces the number of manual steps in your receivables workflows. This results in faster invoice creation and quicker processing on your end because you won’t have to wait for approvals. There will be a decrease in errors which also saves time and leads to more accurate client communications and accounting..

When your accounts receivable process is automated, your finance team won’t be performing tedious data inputting, stuffing envelopes, correcting preventable errors and chasing down late payments. Instead, they can use their time on more valuable projects that drive growth.. 

2. Faster invoicing means you’ll get paid faster and improve cash flow

In a nutshell, the faster you can invoice a customer, the faster you can receive payment. Any delays in the creation or processing of invoices can interrupt the payment process. Whether it’s due to time-consuming manual data entry, waiting for approvals or wasted hours spent locating an incorrect digit, a slow down in your workflows adds more time to the invoicing process which in turn means your DSO will be higher and cash flow will be impacted negatively.

An accounts receivable automation process eliminates the manual tasks like data entry and approvals. It ensures the data that’s transferred and input is correct. This streamlined workflow means reliably accurate invoices can be quickly created and sent out. 

And because most automated AR solutions will provide a way for your customers to make electronic payments, you’ll receive funds faster, especially if you’re able to offer them multiple payment options and early payment discounts.

The bottom line is a speedier invoice process translates into getting paid faster and consequently improved cash flow.

3. Real-time cash positions make managing cash easier and cash forecasting more accurate

One of the most valuable reasons for automating your accounts receivable process with AI-enabled software is that you’ll have access to real-time cash positions. Without automation, your finance team spends days gathering data from different sources and error-prone Excel sheets and then even more time analyzing and preparing all their necessary reports. In addition to this process taking an inordinate amount of time and effort, the truth is the cash positions that are presented are not even up-to-date.

When you automate your accounts receivable process, you’re able to get reliable, real-time totals from one integrated source. This allows you to manage your working capital and cash flow options and make key decisions from accurate data.

Over time, ML and AI will be able to predict expected payments, help you determine the best time and terms for your suppliers and identify high risk accounts.

All this works together to drastically improve your cash forecasting.

4. Reduce the expenses that come with manual processes

In today’s competitive marketplace, businesses need to take advantage of every opportunity to cut costs. And even though automated AR software is an investment, it has the potential to bring real savings.

Creating and processing invoices manually costs more than generating electronic versions through automation. Not only will you reduce the cost of paper, envelopes, postage and equipment, you’ll reduce the cost of chasing down errors that are bound to happen with human input. Dealing with late and overdue payments also takes up valuable administration time–time that could be spent on more value-added tasks.

But those aren’t the only costs to consider. As you grow, automated processes make it easier to scale and most likely will eliminate the need to add another member to your finance team simply to perform manual tasks.

And what about the cost of losing customers? Nowadays, most companies want to deal with businesses that can offer the benefits of digital technology. Providing a self-serve portal, accepting a variety of payment methods and early payment discounts areproven strategies to retain existing customers.

There are direct and indirect savings to be realized when you automate your AR process. 

5. Strengthen relationships with your customers by giving them a better experience

Automation helps improve your customer service in a couple of important ways. Because your digital invoices will be accurate and sent in a timely manner with reminders at helpful intervals, you will be perceived as professional, courteous and forward thinking. Your clear communications will be appreciated. All these are qualities that companies are looking for in business relationships.

Next, by simplifying the customer payment process with a self-serve portal and multiple payment options, both you and your customers benefit. For you, those features mean you get paid faster which helps with cash flow. Your customers benefit from being able to pay at their own convenience and view their accounts without your help.

Professionalism and convenience–a sure path to improve the customer experience.

There’s Every Reason to Get Started Now

As you can see, the reasons for automating your accounts receivable process are compelling. And there’s never been a better time to get started.

But how do you choose a vendor? It’s best to start with a plan and a list of questions like the ones suggested in this article. It’s a quick read and will help you find the right vendor fit. 

But as always, if you still have questions about an accounts receivable automation process, the team at Payference is knowledgeable and helpful, so don’t hesitate to reach out today.